The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes

48 Pages Posted: 29 Mar 2021 Last revised: 9 Sep 2024

See all articles by Jonas Arias

Jonas Arias

Federal Reserve Bank of Philadelphia

Jesús Fernández-Villaverde

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Juan F. Rubio-Ramírez

Emory University; Foundation for Applied Economic Research (FEDEA); Federal Reserve Banks - Federal Reserve Bank of Atlanta; BBVA Research

Minchul Shin

University of Illinois

Multiple version iconThere are 4 versions of this paper

Date Written: March 2021

Abstract

We assess the causal impact of epidemic-induced lockdowns on health and macroeconomic outcomes and measure the trade-off between containing the spread of an epidemic and economic activity. To do so, we estimate an epidemiological model with time-varying parameters and use its output as information for estimating SVARs and LPs that quantify the causal effects of nonpharmaceutical policy interventions. We apply our approach to Belgian data for the COVID-19 epidemic during 2020. We find that additional government-mandated mobility curtailments would have reduced deaths at a very small cost in terms of GDP.

Suggested Citation

Arias, Jonas and Fernández-Villaverde, Jesús and Rubio Ramírez, Juan and Shin, Minchul, The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes (March 2021). NBER Working Paper No. w28617, Available at SSRN: https://ssrn.com/abstract=3814606

Jonas Arias (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Jesús Fernández-Villaverde

University of Pennsylvania - Department of Economics ( email )

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Juan Rubio Ramírez

Emory University ( email )

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Foundation for Applied Economic Research (FEDEA)

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Minchul Shin

University of Illinois ( email )

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